Boeing reports $6 billion quarterly loss amid 6-week factory worker strike

EVERETT, Wash. (AP) — Boeing reported a third-quarter loss of more than $6 billion before turning its attention to whether striking factory workers would accept a contract offer Wednesday and end a walkout that has crippled the company’s airplane production for nearly six weeks.
Members of the International Association of Machinists and Aerospace Workers were voting at union halls in the Seattle area and elsewhere on a contract that includes pay raises of 35% over four years. Their strike since mid-September has served as an early test for Boeing CEO Kelly Ortberg, who became chief executive in August.
In his first remarks to investors, Ortberg said Boeing needs “a fundamental culture change,” and he laid out his plan to turn the company around after years of heavy losses and damage to the aerospace giant’s reputation.
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Ortberg repeated in a message to employees and on the earnings call that he wants to “reset” management’s relationship with labor “so we don’t become so disconnected in the future.” He said company leaders need to spend more time on factory floors to know what is going on and “prevent the festering of issues and work better together to identify, fix, and understand root cause.”
Ortberg expressed hope that the 33,000 striking machinists in the Pacific Northwest would vote to approve the company’s latest contract offer. Their union district was expected to announce the results Wednesday night.
Ortberg, a Boeing outsider who previously ran Rockwell Collins, a maker of avionics and flight controls for airline and military planes, said Boeing is at a crossroads.
“The trust in our company has eroded. We’re saddled with too much debt. We’ve had serious lapses in our performance across the company, which have disappointed many of our customers,” he said.
But Ortberg also highlighted the company’s strengths, including a backlog of airplane orders valued at a half-trillion dollars.
“It will take time to return Boeing to its former legacy, but with the right focus and culture, we can be an iconic company and aerospace leader once again,” he said.
Ortberg previously announced large-scale layoffs — about 17,000 people — and a plan to raise enough cash to avoid a bankruptcy filing.
“He’s got a lot on his plate, but he probably is laser-focused on getting this negotiation completed. That’s the closest alligator to the boat,” said Tony Bancroft, portfolio manager at Gabelli Funds, a Boeing investor.
Boeing hasn’t had a profitable year since 2018, and Wednesday’s numbers represented the second-worst quarter in the manufacturer’s history. Boeing reported that it lost $6.17 billion in the period ended Sept. 30, with an adjusted loss of $10.44 per share. Analysts polled by Zacks Investment Research had expected a loss of $10.34 per share.
Revenue totaled $17.84 billion, matching Wall Street estimates.
The company burned nearly $2 billion in cash, in the quarter, weakening its balance sheet, which is loaded down with $58 billion in debt. Chief Financial Officer Brian West said the company will burn cash through 2025, but at a slower pace.
Shares of The Boeing Co. fell 3% in midday trading.
The long-profitable company’s fortunes soured after two of its 737 Max jetliners crashed in October 2018 and March 2019, killing 346 people. Safety concerns were renewed when a panel blew off a Max during an Alaska Airlines flight in January.
Ortberg needs to convince federal regulators that Boeing is fixing its safety culture and is ready to boost production of the 737 Max — a crucial step to bring in much-needed cash. That can’t happen, however, until the striking workers return to their jobs.
Along with pay raises, Boeing’s latest contract offer includes $7,000 ratification bonuses and the retention of performance bonuses that Boeing wanted to eliminate.
Boeing held firm in resisting a union demand to restore a traditional pension plan that was frozen a decade ago. However, older workers would get a slight increase in their monthly pension payouts.
At a picket line Tuesday outside a Boeing factory in Everett, Washington, some strikers encouraged colleagues to reject the revised contract.
“The pension should have been the top priority. We all said that was our top priority, along with wage,” said Larry Best, a customer-quality coordinator with 38 years at Boeing. “Now is the prime opportunity in a prime time to get our pension back, and we all need to stay out and dig our heels in.”
Best also thinks the pay increase should be 40% over three years to offset a long stretch of stagnant wages, now combined with high inflation.
“You can see we got a great turnout today. I’m pretty sure that they don’t like the contract because that’s why I’m here,” said another picketer, Bartley Stokes Sr., who started working at Boeing in 1978. “We’re out here in force, and we’re going to show our solidarity and stick with our union brothers and sisters and vote this thing down because they can do better.”
Koenig reported from Dallas.